Columbia Kidnap Warning!

There is a greater risk of being kidnapped in Colombia than in any other country in the world. More than a dozen U.S. citizens were kidnapped in Colombia in 1999, twice as many as in 1998. Some have been individual incidents and others have involved large group hostage situations. In some cases, the victims have been murdered. Most kidnappings of U.S. citizens in Colombia have been committed by guerrilla groups, including the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN), which were both designated as Foreign Terrorist Organizations by the Secretary of State in October 1997. Since it is U.S. policy not to pay ransom or make other concessions to terrorists, the U.S. government's ability to assist kidnapped U.S. citizens is limited.

The SEC is hiring!

The U.S. Securities and Exchange Commission is hiring 60 new "cybercops" to monitor the Web to attempt to stem what is defined as a new "climate of Internet lawlessness" The SEC will hire and train as many as 100 enforcement staff people to its existing 850 member enforcement staff. The current staff consists of lawyers and analysts, with 50 to 60 dedicated to combating Internet fraud. For info, go here.

Pure Trust/Constitutional Trust Scams

These scams have been resurrected on the Internet. The IRS has released Publication 2193, a two page consumer brochure warning about the perils of the Pure Trusts. This can be found at the following website. A number of "Pure Trust" type of cases have been decided by the Tax Court recently. In all of them, the IRS was successful in having the Tax Court dismiss the tax payer's case for lack of jurisdiction of the Court. The Tax Court is the only court a taxpayer can go to without first paying the tax due. See the following: BANTAM.TCM.WPD.pdf PHOTOART.TCM.WPD.pdf SCENIC.TCM.WPD.pdf BANANAMOONTRUST.TCM.WPD.pdf BULLHOLDINGS.TCM.WPD.pdf JEFFBURGERPRODUCTIONS.TCM.WP LEGALEASE.TCM.WPD.pdf

Attack Upon U.S. Corporate Tax Shelters

By now it should be clear that the United States is dead serious in its determination to stamp out what it considers abusive tax shelters. This week, the tax authorities took another step in that direction by issuing three sets of temporary and proposed regulations that require promoters to register confidential corporate tax shelters and to maintain lists of investors. In a speech during the annual conference of the Federal Bar Association's Section of Taxation, last-minute substitute speaker Treasury Secretary Lawrence H. Summers jumped into the permissible tax planning/impermissible tax avoidance debate by saying: "Let me be clear: Our aim is to curb illegitimate tax avoidance. We have no quarrel with the natural desire of companies and individuals to minimize their tax burden by legitimate means. We must, however, draw the line at the pursuit of engineered transactions that are devoid of economic substance." Summers announced that during the next six months, Treasury and the IRS will issue updated professional standards that could include limits on contingent fee arrangements, heightened opinion standards, and sanctions on firms that issue opinions on tax shelters. In extreme cases, individuals -- and entire firms -- could be suspended from practice before the IRS.

International Depositors Insurance Corporation

"There have been several questions on the forum about IDIC, which purports to 'insure' several Caribbean banks, including First International Bank of Grenada and Crown Meridian Bank, also of Grenada. Just so that everyone knows, IDIC exists only as a piece of paper in an attorney's drawer and has no physical location or any employees. An information number is listed on its web-site and this goes to the offices of Dominica-based attorney Gerald Burton. One of Burton's employees answers the line with the words "IDIC information". You will be told that IDIC is in the process of "relocating" its physical address and that this number is simply an information line. The reality is that IDIC is not relocating anywhere. It exists as a name only in order to give comfort to easily-leased suckers who think their bank deposits are insured. [attribution: David Marchant ]

Global Prosperity Group

Beware Of The Global Prosperity Group (GPG). It is claimed that this program has already claimed over 30,000 victims. It has "Cease And Desist Orders" in Washington, Oregon and Michigan. Virtually all other states are currently investigating this modern day pyramid scam. The net is inundated with GPG SPAM (unsolicited email). Thousands of GPG complaints are on file at the BBB and Attorney General offices around the United States. www.idir.net/~medintz/downwithgpg/index.html

Due Diligence

OFFSHORE FINANCE CANADA offers free access to its exclusive OFC Due Diligence Directory. Warning notices against companies and financial institutions carrying on business in the international marketplace are issued from time to time by regulatory authorities around the world. Unfortunately, there is no central database which compiles all such warning notices. Rather, investors are required to contact each regulatory authority independently. The OFC Due Diligence Directory was recently updated and is now available for consultation online. It contains over 325 warning notices and is accessible free of charge here.

X-ray scanner that sees through air traveler's clothing

As if U.S. Customs services aren't bad enough at New York's JFK INTERNATIONAL AIRPORT, now there's an X-ray scanner that sees through air traveler's clothing, projecting your naked body image on a screen, a truly electronic strip search. American Civil Liberties Union [http://www.aclu.org] protests: 'If there is ever a place where a person has a reasonable expectation of privacy, it is under their clothing.' Scanners now installed also in Miami, Atlanta, Los Angeles and Chicago at $125,000 each. Travel hints: wear clean, fashionable, non-threatening underwear. Cash bundles do show up. [attribution: Associated Press]

Purpose Trusts are NOT for U.S. Persons

The 'purpose trust' is a commercial, non-charitable 'trust' created in recent years by statute in Bermuda, Barbados, the British Virgin Islands, Cyprus, Belize, the Cook Islands and the Isle of Man. Compared to a traditional trust created to benefit named beneficiaries or to a charitable purpose trust, a commercial purpose trust is established for a particular business objective. It's been used for multi-million dollar aircraft and shipbuilding financing transactions, multi-entity share holding, asset securitization and cross border joint ventures. The 'charitable purpose trust' has been around for centuries, usually created to benefit a religious, educational or other non-profit objective. In such case, while no specific persons are named as beneficiaries, courts enforce the trust terms so that its benefits are distributed to promote the stated purpose. The new business purpose trust often will in turn create a subsidiary corporation, the parent trust's sole purpose being to hold title to shares in the new company. Miami asset protection attorney DENIS KLEINFELD notes: 'The underlying company can serve as part of a financing package, as a title holding entity or even as a corporate trustee.' He points out the 'beneficial objects' of a purpose trust are not people, but the designated commercial purposes. This arrangement does differ from the usual trust based on common law and equitable principles. The US-UK common law rule is that for a valid trust to exist, there must be a person who can enforce the obligations of the trustee to administer the trust in accordance with its terms, a notion known as 'the beneficiary principle'. This requirement is satisfied where the trust is established for a class of individual beneficiaries. To cover this aspect in commercial purpose trusts, statutes provide for a 'trust enforcer' who in theory represents the general group or the public for whose benefit the trust is created. The Bermuda statute, for example, in the absence of an enforcer because of death or disability, allows the trustee of a purpose trust to petition a court to appoint an enforcer. Because they are relatively new, the commercial purpose trust laws are 'a leap into the legal unknown,' Kleinfeld says. And this new entity also raises US tax law issues. International tax attorney J. RICHARD DUKE says: 'A purpose trust almost certainly is 'an association taxable as a corporation' and not a trust for US federal income tax purposes. Favorable US tax rules applicable to other trusts simply cannot be made to apply to purpose trusts.' Some slick promoters advocate creating an offshore purpose trust that, in turn, creates an offshore international business corporation (IBC). They claim this purpose trust arrangement escapes US tax reporting requirements and avoids the trust being treated as a domestic corporation for tax purposes. (Under Internal Revenue Code §§ 672(f)(1) and (3), a controlled foreign corporation or a passive foreign investment company cannot form a foreign trust in order to avoid U. S. taxes). Duke warns against such tax avoidance schemes, adding: 'A US person unfortunately is in quick sand if he is caught using a purpose trust in a misguided attempt to avoid or defer US taxation.' LINKS: Denis Kleinfeld, JD J. Richard Duke, JD More on business purpose trusts, see: 'Non-charitable purpose trusts in offshore centers' here. [attribution: The A-Letter, a periodic Net publication of: THE SOVEREIGN SOCIETY, here. ]

U.S. IMMIGRATION LAWS (BRIEFLY)

It is unlawful for an employer to employ a foreign national in the United States without first obtaining work authorization from the U.S. Department of Justice's Immigration & Naturalization Service (the "INS"). Sanctions imposed on an employer for violation of this law can include fines, restrictions on the future hiring of foreign nationals, and imprisonment. Violations by the employees themselves may result in removal (deportation) or preclusion from other immigration-related benefits. Clearly, it is in the best interests of both the employer and employee to comply with the immigration laws. [attribution: ABA Immigration & Nationality Committee Newsletter]

OPC International offshore scams alert site

Go here.

Siemens German digital signature chip hacked

Hackers have succeeded in cracking the Siemens digital signature card used in cashless payment systems and access control systems across the country. The German Digital Signature was ratified by the European Union only a few days ago, after intense lobbying for a secure system for transactions. The serious breach of security means that anyone using the so-called Geldkarte system stands the risk of having money transferred without their knowing it. Click here.

UNITED KINGDOM PASSES “DRACONIAN” TAX FRAUD LEGISLATION

The United Kingdom has recently passed legislation aimed at tax evasion by Her Majesty’s subjects, which is being hailed as “draconian” by the London business press. While it is too early to tell, it appears that some parts of the new act will be used to put additional pressure on the British protectorates in Europe and the Caribbean to put a damper on the promotion of so-called “fiscal crimes”, as tax evasion is known there. In past months, we have noted the tightening noose around the British overseas territories (including the Caymans, BVI and Bermuda, as well as the European bastions of Gibraltar and the Channel Islands) to the extent they promote tax evasive activities in those jurisdictions. I now predict that the year 2000 will “tell the tale” of the continued viability of these jurisdictions as true offshore financial centres. [attribution: Adkisson Analysis ]

NEW SCAM ALERT

A trend of a new scam is emerging in Eastern Europe. It has hit many central and eastern European banks and will probably spread from there. Here is the scenario. Cash is converted to stock or bonds. The negotiable and quality bearer bonds or stock is left with Bank A and Bank A issues a safe keeping receipt. The safe keep receipt is offered to Bank B as collateral for a loan to borrow up to 50% of the face or market value of the bonds. Loans are typically 12 months or more. The loan is defaulted on and Bank B forecloses on the bonds or stock which is evidenced by the safekeeping receipt issued by Bank A. Query: The Bonds or stock held by Bank A are---choose one of the following: A. Counterfeit B. Worthless C. Were good bonds/stock but were reported missing by the owner and certificates held by Bank A have been cancelled and replaced. D. (RARE ANSWER) Are real, but the two banks have just aided in laundering money and transferring money from one location to another. The correct answer to this new scam is that choice D is becoming more prevalent, replacing the A, B and C choices.

Russian ATM Warning

Most foreign visitors to Russia use ATM's to get their cash. Even that system has now been breached in the corrupt Russian banking system. High tech thieves have been obtaining credit card PINs from corrupt bank employees when foreign visitors use their ATM cards in Moscow. By creating counterfeit ATM cards, they have been clearing out the foreign bank accounts---up to their limits---of the victims through the Visa and Europay systems. An American working in Moscow recently lost $2,300 to this fraud. Withdrawals are taking place outside of Russia, including the U.S. and Western Europe, making capture of the thieves quite difficult.

1st American Legal Corporation

This company has an excellent, informative site which exposes common scams and financial traps. These include such scams as: Anti-IRS Theories, Bank Debentures, Constitutional Trusts & Pure Trusts, Diplomatic Titles & Titles of Nobility, Great Nigerian Scam, Hiding Money Offshore, Unsecured Offshore Credit Cards, Private Offshore Banks, Private Insurance Companies, and Self-Liquidating Loans. It also covers the following financial traps: Alaska Trusts & Delaware Trusts, Annuity Abuse, Black Holes & UFOs, Commissions & Loads, Life Insurance to Pay Estate Taxes , and Living Trusts. They also keep tabs on certain questionable groups, such as the so-called Dominion of Melchizedek, Global Prosperity Group, and the Marc Harris Organisation. Click here to visit the site.

Operation Risky Business

An investigation, code named Operation Risky Business, began in October 1994 and was conducted out of the Custom Service's Office of Investigation in Tallahassee, Florida in conjunction with the Federal Bureau of Investigation. The investigation centered on the illegal defrauding of money and the money laundering activity of suspects involved in an international venture capital loan scam. The Customs Service has thus far been able to identify a minimum estimate of millions of dollars that have been fraudulently gotten from hundreds of victims from at least 10 countries around the world. Operation Risky Business centered on the efforts of a vast network of suspects who defrauded victims through an international venture capital loan scam which was specifically designed never to provide a single dollar to victims seeking the loans. The Scheme Execution of the scam generally involved seven steps: A broad network of associates involved in the international venture capital loan scam, numbering as many as several hundred throughout the world, placed advertisements in newspapers like USA TODAY, The Wall Street Journal, Barons, The New York Times, The Robb Report, The International Herald Tribune and other newspapers, offering investment and venture capital loans. Unknowing victims from throughout the United States as well as Singapore, Israel, Turkey, Australia, Greece, France, the British Virgin Islands, Canada and the United Kingdom would respond to these ads seeking legitimate investment and venture capital loans to start new businesses or expand existing ones. The victims would often be screened and interviewed by first level "brokers" (members of the scamming network) to determine the needs of the victims, their accessibility to funds required to pay the scammers' "processing fee" and to put on the image of a legitimate business enterprise. The victims then often speak with second level "brokers" (members of the scamming network) to determine the victims' ability to pay a "venture capital loan processing fee" necessary to initiate all activities involved in making the venture capital loan. This determination was accomplished by the victims providing photocopies of actual cashier's checks in the amount of the "fee," which the second level "brokers" would verify with the bank involved. The "fee" amount would vary from victim to victim. It would be determined by the "brokers" "sizing up" the victim and estimating the maximum amount of money the victim could pay as the "fee." This "fee" could range from $40,000 to $2 million. The victims then often speak with a person known as a "syndicator" (a member of the scamming network). It was the "syndicator's" job to close the deal. They would discuss the needs of the victims and the requirements of the venture capital loan organization and its non-existent "board of investors" who purportedly provide the actual venture capital funds. The "syndicator" would ultimately provide a contract to the victims which purported to provide the victims with the venture capital they needed and also outlined the victims' need to pay in advance the "processing fee" associated with the transaction. The victims would then pay the "processing fee" and sign the contract. The contract included a critical element which made the entire scam possible, a clause which required the victim to obtain, generally within five to seven days, a letter of credit or bank payment guarantee of $2 million to $20 million or more, to act as a guarantee to the "board of investors" that the venture capital loan amount would eventually be repaid. The scam lies in the fact that no bank would ever provide such a letter of credit or bank payment guarantee without a matching amount of collateral -- which virtually none of the victims had. If they had that kind of money for purposes of collateral, they generally would have no need for a venture capital loan in the first place. The victims then return to their "syndicators" at the end of the five to seven days and inform the "syndicator" of their failure to get the required letter of credit or bank payment guarantee, in some case after contacting dozens of banks. The "syndicator" would explain how the victims had not upheld their end of the signed "legal" contract and that the "processing fee" would now be forfeited to the venture capital loan organization to cover their expenses. Many victims were often then told by the "syndicator" that the "syndicator" could assist the victims in an effort to help them avoid losing their "processing fee." The "syndicator" would then introduce the victims to individuals known as "facilitators" and "underwriters" (members of the scamming network). The "facilitator" would purport to assist the victims in getting their necessary letter of credit or bank payment guarantee -- for an additional in advance fee -- often $10,000 to $35,000. The "underwriter" would work in concert with the "facilitators" and would purport to assist in the sale of off-shore stocks -- for yet another in advance fee -- often $1,800 to $10,000, to repay the venture capital loans in one year. By the time this entire process was done, generally over a period of months, victims may have paid the scammers anywhere from one to as many as a half-dozen payments approaching as much as $2 million. At the same time the scammers put the victims in a position where the scammers, and the victims themselves, viewed the victims as the people not upholding their portion of a "legal" contract. Thus, the victims were willing to pay additional fees in an attempt to not lose their original "processing fee." Unknown to the victims, there was never any money to provide as venture capital. All the fees collected by the scammers were distributed in percentages to the participants involved with that particular victim. The money scammed from the innocent victims went to two offshore banks on the Caribbean Island of Antigua. One of these banks is owned by the scammers themselves. Antigua was chosen by the scammers because of its reputation as a tax haven and bank secrecy country, as well as because of relationships the scammers had with the government officials in Antigua. The scammers' bank was chartered in September 1994 by several of the suspects. With all the fees paid by the victims going to and through a foreign bank, it made it impossible for the victims to take any meaningful legal action to retrieve the funds in the event they even tried. The fact that these same moneys were moved from the United States to a foreign bank, then returned to the United States for payment to the scammers, represents illegal money laundering. SOURCE: U.S. Customs Service

Internet ScamBusters!

Internet ScamBusters! is an e-zine which exposes scams being perpetrated over the Internet and consequently affect both the domestic and international cyber-arenas.

You Can't Know Too Much About Scams!

This is a reprint of an article written by Arnold L. Cornez, J.D. which appeared in the November/December 97 issue of "The ISPI Privacy Reporter". Email and the Internet have opened new flood gates for scam artists, hucksters and checkered people. As Editor of OFFSHORE, an eJournal (a monthly, on the Net, for info, email to rpi@sky.net). I have seen the rebirth of most scams bedecked in new covers -- pyramid schemes, Ponzi schemes, chain letters and just plain vanilla consumer ripoffs. Before we get started you should know that almost weekly, I am asked for my opinion on so and so's book and theories, such and such an investment program, this or that person or company, etc. But, I'm afraid to answer these questions in open forum... lawsuits for defamation (liable or slander) in this overly-litigious U.S. society terrify me. So, I candidly tell my readers just that. I do, however, answer such inquiries for clients, but then only on a very confidential -- for your eyes only -- non-public basis. The purpose of this article, then, is not to name names as if we were the "Offshore Consumer Report", but rather to give ISPI readers a basic understanding of what I consider some of the most commm Offshore scams. The "Buy A Private Offshore Bank Scam" In my view, spending $25 - $70 thousand on an offshore private bank is foolhardy for MOST people. For all but the astute and educated financier, they seldom make a useful business vehicle. The promoters of offshore bank schemes claim they offer two primary advantages: the first is privacy, and the second is the ability of the offshore bank to accumulate (undistributed) profits without those profits being subject to US tax via its US shareholders (an exception to the traditional for profit corporation which is still taxed on accumulated but undistributed earnings). Many buyers have been convinced by promoters that they need a private bank for marshaling assets for various ventures or pooling funds for investing. But, quite frankly, that is hog-wash. There are better and much less expensive vehicles for doing the same thing. In most cases the sale of private banks to ordinary offshore investors is a consumer ripoff. Some hucksters are buying so called "banking licenses" in obscure and untested jurisdictions in bulk for around $2,500 each and then selling them to unsuspecting offshore newbies for upwards of $70,000. Many of the South Pacific tax havens -- a major source of private banking "licenses" -- are close to being insolvent. A fact that few promoters discuss with their clients. These jurisdictions stay "afloat" only because of generous financial support from other nations such as New Zealand and Australia. When they eventually do go bankrupt, where will that leave Mr. and Mrs. Offshore Newbie and their private South Pacific taxhaven bank? Another problem with these licenses is that they may not be assignable or transferable without the consent of the tax haven -- a minor fact often overlooked and not disclosed by the promoters who sell to unsuspecting customers. In many situations the promoter sells it and says "Good Bye!" to the customer leaving the buyers to fend for themselves. Operating an offshore bank so as to qualify for the special status offered under both Canadian and US tax laws means actually operating a banking institution... this is not a learn as you go endeavor. If someone wants to sell you an offshore bank ask him this: who will run it? The "Cookie Cutter" Trusts Scam: In contrast to the claims of various multilevel marketing (MLM) schemes that mass market "off-the-shelf" or "boiler plate" offshore trusts, there is no such thing as a good "one-size-fits-all" trust agreement. Yes they appear to be inexpensive, but, in my opinion they amount to nothing more than scratch paper. An offshore trust (APT) must be customizcd for you and your family. The IRS and Revenue Canada have imposed so many reporting requirements on the APT, that to be tax compliant, you could spend hours just preparing tbe necessary forms. With these disclosure forms there is no longer any privacy with the APT. It is only good for asset protection. And, contrary to what you may hear at that MLM "business briefing" or on that telephone "conference call" with tbe "Betty Crocker" of cookie cutter trusts herself, used alone, a trust does not provide any avenue for legal tax avoidance. While we are on the topic of trusts, avoid the "grass roots" activists. You will know these folks by the terms they throw around, such as: pure trust, constitutional trust, sovereign citizenship, etc. Even if they have a constitutional leg to stand on, all that getting involved with them will get you is a file at the IRS or Revenue Canada labeled "Tax Protester ... audit often". Fast Wealth For Little Investment Scam: "Unbelievable Rates of Return" usually aren't believable. You know the old saw, if it sounds too-good-to-be-true, then it probably is. Don't let down your normal, protective safe-guards for the allure and romance of offshore investing. There is nothing magic about going offshore. High returns come with high risks. Claims of impossible returns mean the likely loss of your investment. Avoid anything to do with prime bank notes or guarantees, the "world's top 100 banks", the roll program. ete. These all have the get-rich-quick allure, but, they are usually "Catch 22" programs designed to rip you off. Yes there may be Prime Bank Notes but if there are, they are for the $100 million dollar crowd. That lets me out -- how about you? The Nigeria Scam: Nigeria is the least respected business community worldwide. Don't do any business with Nigeria. Don't even answer that first fax to share in "secret" misplaced governmental money. The scam has been around longer than Rip van Winkle and continues to lure the suckers who are driven by greed to letting down their safeguards. For more information on this scam, go here. Here is the form of a fax or letter you could receive: urgent and confidential business proposal Dear Sir, I am Mariam XXXXXX (Mrs.), widow of the late Col. Bello XXXXXX, the former Governor of Kano State of Nigeria. My late husband was one of the victims of the November 17th, 1996 Nigerian A.D.C. Aircraft Boeing 722 that crashed in Lagos. I have just been informed by our legal attorney Barrister Samuel Okum of Samuel Okum & Associates that my late husband operated a secret account with fictitious name in a Nigerian Bank into which a total sum of Twenty Nine Million, Five Hundred Thousand U. S. Dollars ($29.5M) was transferred and credited in his favour and stated me as next of kin. The attorney now advised me to seek in confidence a foreign account unto which this fund could be transferred for disbursement as directed by my late husband in his will. It has been resolved that 2% will be your share for nominating an account for this purpose and any other assistance you will give in that regards. 5% has been mapped out to pay back all local and international expenses which may be incurred in the transfer process and 5% has been conceded to the local bank manager here assisting in facilitating the transfer. Finally, 70% will accrue to my family and I, from where our attorney’s bill will be settled. A good part of this fund shall be directed towards executing his will which is to buy shares and stocks in foreign country to secure his children’s future to facilitate the conclusion of this transaction, if accepted, do contact our family attorney through E-mail: xxxxxxx@xxxxxx.com for further information on the way forward. Please, note that I have been assured that the transaction will be concluded in ten (10) bank working days upon commencement by our family attorney, so endeavour to contact him immediately. May I at this point emphasize the high level of confidentiality which this business demands and hope you will not betray the trust and confidence which I repose in you. However, you may need to give me sufficient assurance that you will not sit on this fund when it is finally remitted into your account. Please, give this proposal a prompt response as the condition in Nigeria now is favourable for the transfer to be made since we have a new government in place. Yours faithfully, Mariam XXXXXXXX More information on the Nigeria scam is available here. (c)1997, 1998, Arnold L. Cornez, J.D., all rights reserved. ----------------------------------------- Arnold L. Cornez, J.D. is a member of ISPI's Board of Advisors. He is an international financial consultant and principal associate of tbe Nassau based The Global Group Limited. His critically acclaimed book The Offshore Money Book is available through ISPI for US$29.95 + $5.00 S&H. You may contact Mr. Cornez at his Menlo Park, California office by phone: (650) 324-6888; Fax: (650) 854-9123; or e-mail: offshore@offshore-net.com.

What to do if you've been scammed

If you’ve been conned by a scamster, you can file complaints with the following, all of whom offer free information and assistance: Your state attorney general; you’ll find the address and telephone number in your phone book. The Federal Trade Commission, Telemarketing Fraud, Room 200, 6th St. and Pennsylvania Ave. NW, Washington, D.C. 20580. For a booklet that lists your rights, call the FTC at 202-326-2222. The National Fraud Information Center, a private nonprofit organization, has a form you can fill out and submit online for telemarketing and Internet consumer problems. You can also try calling 800-876-7060. Check out Call for Action, a Washington, D.C.-based network of consumer hotlines: 301-537-8260. Call for Action has consumer counselors who can help route your complaint through the proper channels.